At present, when an Arizona couple goes through a divorce one of the parties to the legal process may be required to pay the other alimony once the divorce is finalized. Alimony, also called spousal support, is financial support paid from one former partner to the other to allow the recipient to survive in once their marriage ends. Alimony payments can take on different formats and may be paid in lump sums or periodic payments over time.
Prior to the passage of the recent federal tax reform law, payers of alimony were allowed to deduct the sums that they provided to their exes from their tax returns. Therefore, if a payer provided their ex-spouse with $10,000 of support over the course of a year they could deduct $10,000 from their own taxes when filing time came around.
Couples that divorce in 2018, though, will not enjoy this tax benefit. Beginning January 1, individuals who finalize their divorces cannot deduct their alimony payments from their taxes. The law does not appear to affect individuals whose divorces were finalized prior to the end of 2017.
This shift in financial burden may have implications for individuals who plan to file for divorce in the New Year. Though alimony and money concerns may not be enough to keep a person from pursuing the divorce that will improve their life, it is important that individuals understand the laws that may be relevant to their divorce agreements and orders. Consultation with legal professionals is imperative to ensure that individuals understand how changes in the law may affect their legal and financial futures.
Source: sanfrancisco.cbslocal.com, “What You Need To Know About New Tax Law,” Dec. 26, 2017